New Commission report will help ensure Green means Green and avoid green-washing, says MEP leading on Sustainable Finance in European Parliament

Molly, who is leading for the European Parliament as author of its initiative report on Sustainable Finance, has responded positively to the report released today by the Commission’s High Level Group on Sustainable Finance.

Molly, who is the UK’s first Professor of Green Economics (at Roehampton University) said:

“I am impressed by the thorough and insightful report produced today by the High Level Group on Sustainable Finance. I particularly welcome their call for a robust and credible classification system for Green financial products so that we can be clear that Green means Green and can avoid the risk of green-washing.

 “While a rapid move away from stranded carbon assets is central and urgent, I am pleased that the HLEG have included consideration of the wider sustainability of economic systems and considered how we can ensure that our financial system works to regenerate the earth’s natural systems and supports a move away from destructive intensive agriculture.

 “Our report in the European Parliament will support the HLEG’s ambition of ensuring that there are incentives for capital to find its way towards the investment that we need to ensure a rapid transition to sustainability and that those of us who buy financial products like savings products and pensions can have simple and clear information about the sustainability impacts of their choices. This will require mandatory disclosure by all financial sector players of their carbon assets as a first step towards more thorough non-financial reporting on sustainability.”

The Parliament’s report will be published later in the week and will then become the subject of negotiations between the political groups before being voted on in the Economic and Monetary Policy Committee towards the end of April.

The Commission will follow up on the HLEG report with an Action Plan on Sustainable Finance in March and the first of a series of legislative proposals in May.


Strong points, from a Green perspective:

  • Widens sustainability and stresses importance of preserving ‘natural capital’ and shifting investments away from damaging intensive agriculture.
  • Clear, robust and credible green taxonomy.
  • Upgrade disclosure rules in line with Taskforce on Climate-related Financial Disclosures (TCFD) in order to make climate change risks and opportunities fully transparent to investors.
  • Need for investor duties to “cascade through the investment chain”.
  • Clear labelling on retail financial products.

Problems, from a Green perspective:

  • No clear rejection of green-supporting factor
  • Long timeframe risks legislative drift between Parliamentary mandates.
  • Too little focus on own institutions and the unsustainable lending of the European Investment Bank and distortionary nature of European Central Bank asset-purchase programme.
  • No requirement for mandatory disclosure of sustainability risks in Review of the Non-Financial Reporting Directive (NFRD)
  • Need to ensure that labelling is multi-level and dynamic – not a tick-box exercise.